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Tighten due diligence procedures for more successful hedge fund investment
Practical Operational Due Diligence on Hedge Funds is an encyclopaedic, comprehensive reference, written from the perspective of an experienced practitioner. Accompanied by a useful archive of factual material on different hedge fund issues, including failures, fines, and closures, this book focuses on the areas due diligence professionals should address, and explains why they're important. Extensive discussion of publicised cases identifies the manager entities and actual fund vehicles involved, and provides commentary on what could have been done differently in each case, backed by actual regulatory materials, such as SEC complaints, that recreate the events that took place. Readers gain a deeper understanding of the many facets of due diligence and the many possible pitfalls, learning how standardise processes and avoid major errors and oversights.
The amount of money managed by hedge funds has almost doubled from the $1 trillion under management at the time of the financial crisis. Hedge funds can be extremely risky, but can be extremely profitable -- as money increasingly flows back in, due diligence on these alternative investments becomes more and more critical. This book provides complete guidance toward the due diligence process, with plentiful real-world examples.
* Identify the areas of due diligence and what can go wrong
* Create procedures and checklists to minimise errors
* Learn what publicised cases could have done differently
* Gain a deeper understanding of massive failures and successes
Proper due diligence can be a massive undertaking, but thoroughness is essential when the price of failure is so high. Practical Operational Due Diligence on Hedge Funds provides the details professionals need to be on point every time.
List of contents
Preface xIiii
Acknowledgments xIvii
About the Author xIix
Disclaimer Ii
PART I Processes and Procedures
CHAPTER 1 What is a Hedge Fund? 3
CHAPTER 2 Defining Operational Issues 7
CHAPTER 3 Structures for Investment in Alternatives 15
CHAPTER 4 Is the Fund for Real? Establishing the Basics 25
CHAPTER 5 Understanding Fund Operations and Controls 61
CHAPTER 6 Governance - Managing Risk Through a Non-Executive Board 65
CHAPTER 7 Reporting to Members and Statutory Reporting 75
CHAPTER 8 The Curse of Leverage (Fund Liabilities) 87
CHAPTER 9 Fund Assets 103
CHAPTER 10 Fraud 129
CHAPTER 11 Fees: the Essence of Hedge Funds 137
CHAPTER 12 Regulatory Actions, Politics and Market Confidence 149
CHAPTER 13 Key Man Risk, Disaster Recovery and Business Continuity 175
CHAPTER 14 Negotiating Terms and Exercising Rights 181
CHAPTER 15 Risk Ratings and Scoring 195
CHAPTER 16 Marketing to Investors 229
PART II Case Studies
CHAPTER 17 Case Studies Pre-2000 239
CHAPTER 18 Case Studies 2000 275
CHAPTER 19 Case Studies 2001 285
CHAPTER 20 Case Studies 2002 289
CHAPTER 21 Case Studies 2003 297
CHAPTER 22 Case Studies 2004 313
CHAPTER 23 Case Studies 2005 319
CHAPTER 24 Case Studies 2006 359
CHAPTER 25 Cases Studies 2007 401
CHAPTER 26 Case Studies 2008 475
CHAPTER 27 Case Studies 2009 601
CHAPTER 28 Case Studies 2010 677
CHAPTER 29 Case Studies 2011 717
CHAPTER 30 Case Studies 2012 773
APPENDIX A Index of Case Studies by Investment Manager 785
APPENDIX B UK Serious Fraud Office Hedge Fund Investor Questionnaire 793
INDEX 795
LIST OF FUNDS 800
LIST OF FUND MANAGERS 805
About the author
RAJIV JAITLY is the managing partner at Jaitly LLP, a risk consultancy that provides independent risk, fund governance and operational due diligence services to global alternative investment clients. He set up and managed due diligence and investment management operations for the alternative investment asset businesses of major companies such as UBS, Santander and AXA. Jaitly has also advised the Regulatory Policy team of the U.K. Pensions Regulator, was appointed an expert by the UK Office of Fair Trading for its market study into the UK defined contributions pensions market and was commissioned by the UK Financial Services Consumer Panel to write a report on Fund Costs and their implications. He has also held appointments as a non-executive director of funds.
Summary
Tighten due diligence procedures for more successful hedge fund investment Practical Operational Due Diligence on Hedge Funds is an encyclopaedic, comprehensive reference, written from the perspective of an experienced practitioner.
